FTC Halts Acai Company Ops

BRIDGEPORT, Conn.FTC and the State of Connecticut filed a complaint seeking to permanently stop a Connecticut-based operation that allegedly used misleading means to sell acai and colon cleanse products. The complaint alleged Boris Mizhen, LeanSpa LLC and two other companies Mizhen controls used fake news websites to promote its products, made deceptive weight-loss claims, and told consumers they could receive free trials by paying only  a shipping and handling fee.

However, FTC alleged many consumers ended up paying $79.99 for the trial, and for recurring monthly shipments of products that were hard to cancel. The defendants allegedly took more than $25 million from consumers in the United States.

The parties agreed to a court order temporarily halting the illegal conduct; continuing an asset freeze; appointing a temporary receiver; and giving the receiver, the FTC, and the State of Connecticut immediate access to the business premises.

The complaint alleged the defendants hired affiliate marketers who used fake news websites with logos of major news sources, such as CNN, MSNBC and Fox News to promote the defendants' products. The sites included stories such as "Acai Berry Diet Exposed: Miracle Diet or Scam?" and "1 Trick of a Tiny Belly: Reporter Loses Her 'Belly' Using 1 Easy Tip." The fake news sites had links to the defendants' own websites, where consumers were offered trial samples.

According to the complaint, once consumers landed at the defendants' sites including TryLeanSpa.com, TryNutraSlim.com and TryQuickDetox.com they were told that for a limited time only, in exchange for a nominal shipping and handling fee, typically $4.95 or less, they would receive trial samples of the acai berry or colon cleanse product or both." However, the defendants allegedly would typically charge consumers either $79.99 for one of the products or $158.98 for two.

The complaint alleged the defendants used several entities known as "Independent Sales Organizations," including Check21 LLC and Eureka Payments LLC, to obtain merchant accounts at banks to process credit and debit sales transactions. Using these merchant accounts with several banks, the defendants caused millions of dollars of unauthorized credit and debit card charges.

The defendants' allegedly deceptive practices also included charging some consumers $79.99 for products before the consumers even received the trial samples or before the 14-day trial period had ended; falsely promising a "100% Satisfaction Guarantee" and full refunds to customers who were dissatisfied with the product; misrepresenting that objective news reporters have performed independent tests on the products and independent consumers have endorsed the products; making unsupported claims that consumers could lose a significant amount of weight quickly; and falsely stating that the claims were clinically proven. The complaint alleges that the defendants' business practices violated Sections 5 and 12 of the FTC Act, the Electronic Funds Transfer Act and Regulation E, and the Connecticut Unfair Trade Practices Act.

The stipulated court order halts the defendants from marketing or selling "negative-option" continuity plans, from making unauthorized charges while selling any good or service, and from making certain deceptive claims. The order also requires the defendants to cease collecting on customer accounts, and extends an asset freeze over the defendants until a final resolution of the court action.

This is the FTC's 11th case involving fake news websites used to promote dietary supplements. In April 2011, the agency charged 10 companies that operated "fake news" sites promoting acai berry weight-loss products.

This seizure is part of a growing trend of increased federal enforcement against supplement manufacturers that allegedly break the law. Within the past month, FTC filed a permanent injunction against one company, three supplement company workers were imprisoned, and U.S. Marshals seized all of one manufacturer's dietary supplements.